Iran and Pak­istan up­beat on gas pipeline, bi­lat­eral trade

The Pak Banker - - COMPANIES/BOSS -

Iran and Pak­istan have de­cided to com­plete the Iran-Pak­istan Gas Pipeline on a fast track and to ex­pand their bi­lat­eral trade man­i­fold, be­sides co­op­er­at­ing in the mas­sive China-Pak­istan Eco­nomic Cor­ri­dor pro­ject.

The two coun­tries are very up­beat over the pipeline and trade prospects on as Western sanc­tions are set for lift­ing by US and Western sanc­tions which were aimed at stop­ping Iran from pro­duc­ing nu­clear weapons.

This op­ti­mism on stepped up eco­nomic and busi­ness re­la­tions were voiced at the just-con­cluded visit to Is­lam­abad by the Ira­nian For­eign Min­is­ter Jawad Zarif. He had de­tailed ne­go­ti­a­tions on these sub­jects with Sar­taj Aziz, Ad­vi­sor to Prime Min­is­ter Nawaz Sharif on Na­tional Se­cu­rity and For­eign Af­fairs.

Iran and Pak­istan ne­go­ti­a­tions led to sev­eral key de­ci­sions in sec­tors like ener- gy, nat­u­ral gas, trade, and specif­i­cally the on­go­ing Iran-Pak­istan Gas Pipeline Pro­ject. Zarif and Aziz agreed that en­hanc­ing bi­lat­eral co­op­er­a­tion in the energy sec­tor is one of the ma­jor ar­eas of mu­tu­ally ben­e­fi­cial co­op­er­a­tion. The Iran-Pak­istan gas Pipeline should be com­pleted in the short­est pos­si­ble time.

Zarif said "my visit to Pak­istan, the sec­ond in four months, is sig­nif­i­cant be­cause Iran wants co­op­er­a­tion with Pak­istan in all sec­tors." He also said "tech­ni­cal work on Iran-Pak­istan Gas Pipeline (IP-Gas) pro­ject is in progress in co­or­di­na­tion with rel­e­vant min­istries of the two coun­tries. Eco­nomic re­la­tions be­tween the two coun­tries will fur­ther deepen as soon as decades-long Western re­stric­tions on Iran are lifted, fol­low­ing the Nu­clear Agree­ment with P5+1."

Zarif, re­ply­ing to a ques­tion also sup­ported the on­go­ing com­ple­tion of $47 bil­lion plus China-Pak­istan Eco­nomic Cor­ri­dor, or CPEC. He said, "Iran sup- ports growth and de­vel­op­ment in Pak­istan and the en­tire re­gion."

Equally ju­bi­lant over the prospects of lift­ing of the sanc­tions, Zarif's coun­ter­part Sar­taj Aziz re­cip­ro­cated, and said: "We have had pos­i­tive dis­cus­sions over ex­pan­sion of the bi­lat­eral co­op­er­a­tion, and we will go ahead with full speed to achieve our goals and de­ci­sions." Aziz con­grat­u­lated Tehran over Iran's nu­clear agree­ment with the world pow­ers, as im­ple­men­ta­tion of the I-P gas deal will con­trib­ute to re­gional and in­ter­na­tional peace and se­cu­rity. It will also open new av­enues of eco­nomic and com­mer­cial co­op­er­a­tion be­tween Pak­istan and Iran.

Energy-starved Pak­istan has been pin­ning great hopes over the US-Western and Iran nu­clear talks be­cause its vi­tal I-P gas projects has been held up for two decades for one rea­son or the other. The pro­ject was ini­ti­ated in 1994 to sup­ply 5.6 bil­lion cu­bic feet (bcf) of gas from Iran's South Pars gas fields. It in­cluded sup­ply of 2.5bcf to In­dia and 3.1 bcf to Pak­istan. It had a pro­jected cost of $7 bil­lion at that time.The cost es­ca­lated rapidly to $10 bil­lion in 2012.

In­dia pulled out of the pro­ject when US nu­clear sanc­tions were ap­plied against Iran, but Pak­istan stood by the pro­ject. Iran and Pak­istan de­cided to com­plete the pro­ject by 2014 at a cost of $10 bil­lion. The pro­ject was re-ac­ti­vated in 2010. For­mer Pak­istan pres­i­dent Asif Ali Zar­dari vis­ited Iran in March 2013 and par­tic­i­pated in the cer­e­mony mark­ing com­ple­tion of the Ira­nian por­tion of the pipeline.

Prime Min­is­ter Nawaz Sharif is very en­thu­si­as­tic about the Iran-Pak­istan pro­ject. "He is hope­ful that the pro­ject will be taken up quickly," his Min­is­ter for Petroleum and Nat­u­ral Re­sources Khaqan Ab­basi said. The pro­ject in its cur­rent form en­tails ly­ing down 1,800 kilo­me­ters (1,100 miles) of pipeline from Iran to Pak­istan. Iran, started build­ing the pro­jected in 2012 and in 2013 com­pleted it.

Pak­istan has been hold­ing up on con­struc­tion due to the sanc­tions. But now, Is­lam­abad is re­ac­ti­vat­ing it, as China is also fi­nanc­ing the pro­ject. China is to lay the pipeline from South­ern re­gion of Nawab­shah to the al­ready op­er­a­tional deep-sea port of Gwadar, lo­cated just across the Straits of Hur­moz, which con­nects Pak­istan with GCC coun­tries. Gwadar is also close to Iran and its nat­u­ral gas re­gion of South Pars.

Ab­basi, said: "As soon as the Nawab­shah-Gwadar por­tion of IranPak­istan projects is con­structed, we will have to build only 80 kilo­me­tres of the pipeline for which work is in hand. We have drawn up plans to ex­tend this pipeline with north-Western China, to ben­e­fit from China-Pak­istan Eco­nomic cor­ri­dor."

Of­fi­cial and across the bor­der unof­fi­cial trade be­tween Iran and Pak­istan has been grow­ing fast, es­pe­cially through the land route - from the Pak­istani bor­der town Chaman and Taf­tan, the Ira­nian bor­der town. It in­cludes huge, unof­fi­cial im­port of Ira­nian oil and petroleum prod­ucts through trucks and buses car­ry­ing large oil cans. One es­ti­mate puts the of­fi­cial Iran-Pak­istan bi­lat­eral trade at $1.0 bil­lion a year.

Alireza Haghigh­ian, Tehran's Am­bas­sador to Is­lam­abad said: " Iran is ready to ful­fill Pak­istan's re­quire­ments of elec­tric­ity, nat­u­ral gas, crude oil and petro­chem­i­cals, be­sides co­op­er­a­tion in in­fra­struc­ture projects like lay­ing highways, and rail tracks, con­struc­tion of dams, and set­ting up oil re­finer­ies and power plants." Pak­istan's public and pri­vate sec­tors are likely to gab this of­fer, rais­ing the two-way trade, in­vest­ment and em­ploy­ment of man­power on the two sides, man­i­fold. With all these plans in view, and the sanc­tions out of way, the two coun­tries and the re­gion have good prospects to ex­pand busi­ness from energy to petro­chem­i­cals, and food to fuel.

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